It's All Politics

7:07 am

Fri November 22, 2013

Wal-Mart Food Drive Unwittingly Fuels Talk Of Minimum Wage Hike

Dozens of people protest for better wages outside a Los Angeles Wal-Mart store on Nov. 7.

Lucy NicholsonReuters/Landov

Wal-Mart's pay practices have long been targeted by advocates of America's working poor.

So it was no surprise that it became national news when the discount retailer, the nation's biggest employer, asked workers at an Ohio store to contribute to a holiday food drive — for fellow workers.

Wal-Mart officials said the store-level effort spoke to employees' concern for each other, and that similar drives have been held in prior years.

But activists lobbying Congress for the first increase since 2007 in America's $7.25-per-hour minimum wage have seized on the food drive as fresh evidence for their cause.

"Wal-Mart is the largest employer of low-wage workers in the country, and they set the terms of this debate," says Judy Conti of the National Employment Law Project. "Don't add insult to injury and ask low-paid workers to help those even worse off."

The Wal-Mart food drive, and recent reports detailing a McDonald's website for employees that suggested selling possessions online at eBay for extra cash, come as the Senate — with President Obama's support — is poised to consider a bill that over three years would bump up the minimum wage to $10.10 per hour.

The legislation, expected to go to the Senate floor in early December, would also increase tipped workers' federal minimum hourly wage of $2.13, unchanged since 1991, to $7.10 over a similar period.

Meanwhile, low-wage worker advocates in at least nine states, from New Jersey to Alaska, are campaigning for state-level increases in minimum hourly wages. A handful of counties and municipalities, including Washington, D.C., are contemplating the same.

The latest? The Massachusetts Senate this week voted overwhelmingly to raise the state's minimum wage from $8 an hour to $11 an hour over three years, and ultimately to tie increases to inflation. The measure now moves to the state House.

Push For Federal Action

There is no denying that the nation's minimum wage has not kept up with rising prices since Congress overwhelmingly passed the Fair Minimum Wage Act of 2007.

Calculations based on the Consumer Price Index suggest that if the federal minimum wage approved six years ago was adjusted for inflation, it would be $10.75 today — $3.50 more per hour than the actual minimum wage.

The 2007 legislation passed with a 315-116 House vote and a 94-3 vote in the Senate. It bumped up the federal minimum hourly wage — then $5.15 — incrementally over three years to its current $7.25 level.

According to data compiled for the Senate labor committee, 19 states and Washington, D.C., have since approved minimum wages that exceed the federal mandate, with a high of $9.19 in Washington state. Ten of those states have minimum wage increases tied to inflation, and 30 states have voted to approve higher minimum wages for tipped workers.

And a recent Gallup poll found that three-quarters of Americans, including a majority of Republicans, would support a hypothetical hike in the minimum wage to $9.

But even the most ardent advocates of the legislation, introduced by Rep. George Miller, D-Calif., initial sponsor of the 2007 bill, and Sen. Tom Harkin, D-Iowa, acknowledge that its prospects are dim, given the atmosphere on Capitol Hill and sustained opposition by powerful business interests like the U.S. Chamber of Commerce.

The chamber and other business groups assert that increases should be linked to tax incentives for small businesses, similar to provisions in previous minimum wage bills, like deductions for small business investment in equipment and expansion.

Says Randy Johnson, senior vice president of labor, immigration, and employee benefits for the Chamber of Commerce, in a statement provided to NPR:

"Any discussion about raising the minimum wage needs to recognize that small employers often have to operate under very slim profit margins and will have the hardest time absorbing these higher labor costs. They will have to find more revenues or trim costs to make up the difference. This reality is never part of the discussion. Furthermore, indexing the minimum wage to inflation means that employers will likely be faced with automatically increasing labor costs without an automatic increase in revenues or profits.

"Additionally, many small employers are currently trying to figure out how to keep their current benefits for their employees or whether they can continue to have their employees continue to work a traditional 40 hour week. Increasing the minimum wage will only add to their uncertainty and burdens and make creating new jobs and expanding considerably more difficult."

It's worth noting that research on the effect of hikes in the minimum wage suggests that Johnson's assertions may be true, but they may not.

A recent survey of 38 economists by the Initiative on Global Markets at the University of Chicago's Booth School of Business found sharp disagreement about the effects of a minimum wage hike.

When asked if hiking the minimum wage to $9 per hour would "make it noticeably harder for low-skilled workers to find employment," 34 percent of the economists agreed, 32 percent disagreed, and nearly a quarter said they were uncertain.

Starting A Conversation, Again

Conti, of the National Employment Law Project, says that despite the likelihood that there aren't votes in the Senate to move the wage bill, "you have to start somewhere."

"Minimum wage increases always involve long and hard-fought campaigns," she said. "We need to have this discussion publicly, in the media, in social media, and during the election cycle."

In the wake of the food drive contretemps out of its Canton, Ohio, store, Wal-Mart said that its full-time workers earn on average $12.87 per hour.

OUR Walmart, a nonprofit organization that serves as an independent voice for Wal-Mart hourly workers, says its calculations show that the average salary is between $8 and $10 per hour.